Southern SNF Management, Inc., Rehab Services in Motion d/b/a Dynamic Rehab and nine affiliated skilled nursing facilities in Florida and Alabama have agreed to resolve allegations that they violated the False Claims Act by submitting or causing the submission of false claims to Medicare for medically unnecessary rehabilitation therapy services, the Department of Justice announced today. Under the agreement, Southern SNF, Dynamic Rehab and the nine skilled nursing facilities will pay the United States a total of $10 million.

“Today’s settlement demonstrates our continuing commitment to ensure that Medicare providers do not place their own financial gain over patients’ clinical needs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “Such conduct is especially unacceptable when it seeks to take advantage of older Americans, who are some of the most vulnerable members of our community.”

Medicare reimburses skilled nursing facilities based on a patient’s Resource Utilization Group (RUG) level, which is supposed to be determined by the amount of skilled rehabilitation therapy required by the patient. The United States alleged that between October 2009 and December 2013, Southern SNF, Dynamic Rehab and the nine skilled nursing facilities’ corporate policies and practices encouraged the provision of medically unreasonable and unnecessary therapy without regard for patients’ individual clinical needs. The companies’ actions resulted in the submission of false claims based on inflated RUG levels.

“The United States Attorney’s Office for the Southern District of Alabama is committed to holding accountable those who place profit over the medical needs of patients,” said U.S. Attorney Richard W. Moore for the Southern District of Alabama. “The provision of excessive and medically unnecessary therapy services will not be tolerated.”

“Health care companies that do business with the Federal government must bill taxpayer funds honestly,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General. “Those engaging in deceptive billing practices can expect an aggressive investigation to recover inappropriately obtained funds.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by La-Wanda Davis, Tramecier Donald, and Megan Dinkins, former employees of one of the skilled nursing facilities. Under the False Claims Act, private citizens can sue on behalf of the government for false claims and share in any recovery. The whistleblowers will receive $2 million of the recovered funds.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Southern District of Alabama, the Department of Health and Human Services Office of Inspector General and the Federal Bureau of Investigation.

The case is captioned United States ex rel. Davis, et al. v. Southern SNF Management, Inc., et al., Case No.13-000384-WSM (S.D. Ala.). The claims resolved by the settlement are allegations only; there has been no determination of liability.